FLEETDRIVE parts will gradually increase to 60 % by 2027- 2028 and 80 % by 2030. The TKDN rule is meant to push for a“ deeper supply chain integration” between Indonesia and foreign EV makers.
Buyers of electric buses were also able to enjoy a subsidised VAT rate of 5 % if the vehicles were made of 20-40 % local parts.
Initially meant to end by 2024, Indonesia’ s financial incentives for both the sale and production of EVs were extended to December 2025.
In September 2025, however, the government announced they will not extend CBU EV incentives in 2026. Consumers and manufacturers had until 2025 to take advantage of import tax and PPBnM exemptions.
According to Indonesia’ s Minister of Industry Agus Gumiwang Kartasasmita, this shift in policy encourages manufacturers to produce their EVs within Indonesia instead. Brands such as BYD, VinFast, and Hyundai are in the process of building their own facilities within the country. BYD’ s plant was set to finish by the end of 2025
and start production this year, however, there have been no reports on the plant’ s completion yet.
As of writing, the Indonesian government has yet to confirm if automotive incentives will be present in 2026. Director General of Indonesia’ s Metal, Machinery, Transport Equipment, and Electronics Industry, Setia Diarta, said that a proposal has already been sent to the Ministry of Finance.
The proposal recommended restoring financial incentives for the Luxury Good Sales Tax( PPnBM) and Value Added Tax( VAT). Aside from luxury goods and residences, the PPnBM tax also applies to vehicles purchases with rates dependent on factors such as vehicle passenger capacity, engine, and more.
Though incentives haven’ t been confirmed for 2026, the tax incentive for low-cost green cars( LCGC) will remain available until 2031. However, Setia stated that tax incentives for vehicles that are not considered“ low cost” are still under discussion.
MALAYSIA
ISSUE 57 FEBRUARY 2026 / WWW. AFMA. ORG. AU 9